Speaker 1: Ah, So let's just say a self storage down the
street was a hotterbox, Well yours in your park, you
can get fifty or sixty now they would rather write
from you. One is closer and it's in their community.
Two is cheaper than the one down the street. So
there's definitely other ways to maximize profits in revenue in
molall parks.
Speaker 2: You're listening to Carrie Letz's Financial Survival Network, where you
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Speaker 3: Welcome you are listening to and watching the Financial Survival Network.
I'm your host, Carrie Leutz. It's February third. Hard to
believe we made it through January. The country still somehow function.
I'll go figure nobody can quite figure it out, but
I guess it's when the ship is sailing. The ship
keeps sailing until something stops it from sailing. But if
you want to sail, you want to excel, then you
need to listen to my next guest Walter Johnson. He
is a mobile home park magnet. And Walter, it's great
to have you on the show. You know, you've been
in real estate. You retired when you were twenty seven,
then you got bored, and then you somehow discovered mobile
home park. So how did that evolution take place?
Speaker 4: Walter? Well, yeah, well, I guess the the re tyrant part, right.
Speaker 1: So I had friends that when I was living in
Denver and they had nine to five lived in his
high rise on a nineteen four beautiful view, and they
want their word from their nine to five And I
stayed home and I was trigging a bottle of wine
every day waiting for our freezy at home.
Speaker 4: So that gets boring after a while.
Speaker 1: You can get back to work or become alcoholic, right,
So yeah, I just chose to get back to work, right.
Speaker 3: Yeah, twenty seven is too young to retire, man, let's
face it, come.
Speaker 4: On, Yeah, but you think so, are you? Like, Hey,
this is actually a great bucket list. I'm retired by
the age of thirty, and it's sound right in theory,
but it's the American dream. Yeah, exactly. I don't.
Speaker 1: I don't think that's the American dream. So I think I'll
keepboard until I expire.
Speaker 3: Nightmare is an there man that for sure, Key is
not to retire at twenty seven. It's to be able
to retire at twenty seven.
Speaker 4: Right, yes, and keep going absolutely.
Speaker 3: Yeah. So, like many of you out there have a
very negative connotation of mobile home parks. You think of
trailer trash, you think of meth labs, you think of
a bunch of cars up on blocks, and you know,
you have very negative impressions of the whole space. But
it really isn't like that, is it, Walter, No.
Speaker 4: No, no, I'll give someone. I'll give your audience a secret.
Speaker 1: So in mobile home parks, usually like there's a city
or county inspector that I actually goes, and there's park
roles so that the home actually has to half you know,
you can't have any cracks or bust out windows. They
have that scurrying on the homes. They have to keep
their homes in a certain like a certain condition. If not,
then you can't bring in new homes and actually sell
them because the city our county inspector goes and says, well,
this park is not up to our standards. Therefore you
have to get it up to our standards to be
able to bring in new homes, so they really regulate them.
And I think when you when you actually go into
a park, you'll look at it and saying, yeah, this
is actually relatively clean. And I like that idea versus
just buying a house in some random subdivision and you
can't control the subdivision.
Speaker 3: Right, So and then it becomes a question of like
who your tenants are or how do you work it?
Do they own they purchase the trailer from you and
rent them in rent of space?
Speaker 4: Absolutely? Yes, yep.
Speaker 1: And we do our our same background checks, same credit checks,
same income verifications, so we do the same I would say,
really similar to let's say apartment building aura or a
single family rental.
Speaker 3: What's the average cash flow on this type of deal
we're getting.
Speaker 4: I mean, if we can get the.
Speaker 1: Cap rate in the indust rate like two or three percent,
we're right around about twenty to thirty percent caption and
cash return.
Speaker 4: And that's when we look which is.
Speaker 3: Nice, which no wonder the sophisticated investors private equity have
gotten into it. But I can't see some Wall Street
firm or Miami firm because all the hedge funds, everyone
knows they've all moved down to Florida now to escape
New York. I can see them effectively managing a mobile
home park.
Speaker 4: No, they manage it from the ivory tower. I would say, right,
we're managing boots on the ground. So we kind of
you know, we intersect at times.
Speaker 1: But you know, they have a ton of capital that
they get for sheet and they're able to to you know,
manage from an office in let's say Florida or New
York or Chicago or LF.
Speaker 3: So a cash on cash return twenty thirty percent? Is
there a room to upgrade these parks when you buy
them to value ads as we call them, or they're
extra spaces you can put in put in more units?
Do you upgrade the units?
Speaker 4: Yeah, upgrade but in more more homes.
Speaker 1: If you have a you know, vacant house or vacant
lots that that don't really fit home, you can someone
you can put it. Someone can use that for storage,
or you can you can put self storages. Right, so
self storage is actually you know a great asset. But
if you actually have some extra land on in a
mobile park, you can put a mini storage on there
and actually charge you know, fifty sixty bucks a moth
and compete with the self storage down the stream.
Speaker 4: Very cool, and so I'm all right.
Speaker 3: How much did you say they bring in a month
on average?
Speaker 1: So let's just say a self storage down the street
was a hotterbox, Well, yours in your park, you can
get fifty or sixty. Now they would rather write from you.
One is closer and it's in their community. Two is
cheaper than the one down the street. So there's definitely
other ways to maximize profits in revenue in my wall parks.
Speaker 4: Interesting.
Speaker 3: Interesting, So what's the biggest drawback to this space?
Speaker 1: The biggest drawback what I'm facing is that it's not
I mean, you will make money, but you're you're you're
of course, nothing's for free, I guess in life, right,
So you're still working hard to find deals, You're still
working hard to bring in new homes, so there's still work.
So even though you're actually making money, I wouldn't say
it's passive.
Speaker 4: I al would say it's it's it's proactive in that right.
Speaker 3: So when you're getting into this, when you buy a park,
you're buying it for cash. Can you find nance these
things you can finance? So right now, I think raids
are probably seven to seven point seventy five. I think
we got we got a cool from a lender. However,
right now, if you talk to a seller and are
usually open to sellar carries or sellar financing, we can
get a rate cheaper than that.
Speaker 1: So that's actually a great point. I'm glad you brought
that up. It's because if you actually buy a park.
Speaker 5: And it's an a cap, right, so eight a cap,
but then you can actually have the seller finance seat
for six percent, and especially if it's great six percent
inches only, then you're actually doing.
Speaker 4: Really well double digits returns.
Speaker 1: Now, if you decrease expenses and raise the rents, now
you're at you know your your above twenty percent cash
on cash return.
Speaker 4: Gotcha?
Speaker 3: And uh, all right, So, like what are the red
flags when you look at a trailer community.
Speaker 4: Let's say I better pass this.
Speaker 1: One by, yes, so we you know, we get a
lot of those a lot of those red flags. So
one is low occupacy too, is that it's just not
in the right I want to say neighborhood, but it's
not in the right area, so the population is not there.
So if you look at let's say a part and
the homes in the area about one hundred thousand, one
hundred and twenty five thousand dollars like a single family home,
you actually don't want to buy. That part is the
reason being is because with lobbyns and you're selling a home,
you're competing with that single family home.
Speaker 3: Right, So you okay, And basically most communities are adverse
to you opening or building new mobile home communities, right,
and therefore the supply is restricted.
Speaker 1: Yes, yeah, so the supply is restricted, but the demand
is going up, so we definitely have a conundrum. I
would say, when you look at the mobile home park
in a particular area, they use those those that revenue
for taxes to pay for schools or whatnot in that
community monthly. The cities and counties don't make a lot
of mon audio on mobile home parks, therefore they do
not like them.
Speaker 4: Plus, I would see the average person.
Speaker 1: In a subdivision saying I don't want a mobile home
park in my neighborhood.
Speaker 3: So you do have that state You got nimby people, right, yeah, yeah,
you got you know, please anybody building anyone building new ones.
Speaker 1: There's a few, but I haven't met a lot and
I don't know a lot of them that said, hey,
here's actually a plot of land, we're going to build
a mobile home park, and actually was successful.
Speaker 4: It takes years.
Speaker 3: Maybe you could do it in Alaska or something or
some remote area with.
Speaker 1: Yeah, it is anything like that right towards you know
the good old boys system like a handshake. You probably
build ten, you know, homes in that particular park, but
you know it takes years. And by the time you
build those ten and you see the time you spent
in in the income you're generating human as with buy
one that's already existing and cash they want right all.
Speaker 3: Right, Well, hey, anything else you want to tell us
about this opportunity?
Speaker 4: Yeah, I think for your for your audience and your listeners.
Speaker 1: I think you mentioned something in the beginning of this
in the segment that the private equity companies in these
big wigs are coming into buying parts. That is true,
but there's still opportunity for you know, your listeners or
just people in general to actually buy mobile home parks
and actually have a I would say, a stable cash
loan compared to I think it's even better to partment
though these are Sego family homes, So I think there's
definitely still opportunity. I don't want to pake this picture
that since we're in luck, we're in in. Are these
other big wigs are in that that this opportunity is
lost and that's not the case.
Speaker 3: All right, excellent, all right to thank gutting questions for
Walter myself, shoot me an email Walter. How do we
reach you? How do we connect with you on the web?
Speaker 1: Yeah, yeah, reach out to me so you can email
me Walter at Sonoscapital dot com or give me a
call on my office forty zero six seven four two
zero three five.
Speaker 3: All right, And the links are in the show notes
to this interview on Financial Survival Network dot com. When
you visit there, just got to click it. And I
would just ask that when you stop by, you opt
in for our free newsletter, like over sixty seven thousand
other FSN members have. And Walter, appreciate you coming on
interesting investment proposition. We'll talk to you again soon.
Speaker 4: Thank you appreciate it.
Speaker 2: Thanks for listening to carry Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than
ever